Opportunities offer long-term positives for investors

Sophie van Oosterom said investors need to focus more on income rather than capital value growth.

The real estate industry has seen the “end of one world” but investors should stay positive, panellists said at the ULI Europe Conference today.

Following discussions about global economic and political risks, a number of real estate investors said that the period after the financial crisis has led to more forward-looking and global markets.

Nathalie Palladitcheff, executive vice president of Ivanhoé Cambridge, said: “It’s the end of one world, but it’s not the end of the world.

“There are more options and more choices than 10 years ago. We have more options in terms of geography. A few years ago residential was not institutional, but now there are big names investing in it.”

François Trausch, chief executive of Allianz Real Estate, said markets around the world had matured enough for Allianz to move into them. Pension funds used to be net sellers in real estate before the current cycle, but now they are net buyers with more options worldwide.

He said: “Now we can invest in many parts of the world while keeping the same risk portfolio. That wasn’t the case before the financial crisis.”

Opportunities opening up in parts of Asia, including China, means those markets will see a rise in sophisticated, long-term global players in the coming decades.

In China, he added, industries work so quickly that partnering with a Chinese investor means learning how to take risks while being able to show the next generation of investors how to work on a long-term global level: “Everything in China is a good investment from a learning point of view.

“Allianz today is much more sophisticated than Allianz 20 years ago, and these players will go through the same process.”

Meanwhile, investors looking for growth in existing markets will have to focus on income rather than capital value growth.

Sophie van Oosterom, EMEA chief investment officer at CBRE Global Investors, said: “How do we justify investing in 2% yields? What’s the alternative? The cap rates are low, but we can find markets where we can find rental rates to compensate that.

“We’re pushing into investments where we think we can make a difference through asset management, leading to rental growth.”

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